But before you drastically slash prices, zealously market your sale, and eagerly wait for customers to beat down your digital doors … it might be time to consider the pros and cons of competing on price.

If you’re considering a massive end-of-year sale — also known as a flash sale — there are some questions you need to ask first.

The answers will likely mean the difference between flash boom and bust. Flash sales aren’t for everyone. In fact, they can cost you money and face if poorly executed.

That’s why your flash sale — if you even run one — must stand out, be intelligently targeted, and used as a trust builder that generates recurring revenue rather than a one-off margin-killing sale.

Keep reading to discover how to successfully run a flash sale …

But if flash sales are already a major part of your ecommerce strategy, then you know how time-consuming they can be behind the scenes.

That’s why we created Launchpad, an automation tool designed especially for flash sales, product launches, and major campaigns.

To Flash Sale or Not to Flash Sale?

If you haven’t stopped to ask whether you should even be considering a flash sale you likely haven’t considered the impact they can have on your brand and bottom line.

There’s no sugar-coating it, flash sales can erode margins and attract bargain hunters with no intention of becoming loyal customers. In a worst-case scenario, if you fail to deliver on inventory, fulfillment, and shipping promises they can destroy your reputation.

On the flip side, a well-executed flash sale that offers merchandise at a steep discount for a brief period of time can grow the top line lightning fast, increase CLTV, and earn loyalty you otherwise might not have.

So how can you tell if a flash sale is right for you?

Ultimately, the ultra-specific goal you set will determine the answer:

Move excess inventory

Acquire new customers

Grow the top line

Boost profits

But you can also figure out in a relatively short period of time whether flash sales are right for you without doubling down on a Cyber Monday or Black Friday-like effort by testing a mini-flash sale against non-flash sale results.

In the span of just two weeks the company ran two mini-flash sales and compared the performances against non-flash sale KPIs:

Results of the first flash sale include:

51% increase in traffic

50% increase in conversion rate (purchases divided by visits to the landing page)

236% increase in revenue

Results of the second flash sale include:

5% increase in traffic

105% increase in conversion rate

78% increase in revenue

On the surface, these results look great and the company says it’s planning similar promotions in the future.

But notice what’s not immediately discussed in the case study: profitability.

I know what you’re thinking, “but I’m not solely concerned with whether a particular flash sale is profitable.” That’s great, but if you’re concerned about the long-term, you absolutely need to be tracking flash sale customers in your analytics after the first purchase to see:

Here are three additional reasons flash sales fail to impress and how you can fix them:

Flash Fail #1: Shipping

Customer perception is shaped not only before and during a flash sale but also by what happens after a purchase is made.

Shipping flash sale items quickly is paramount. More than two-thirds of the respondents in this survey say one-day shipping is a priority:

Twenty-two percent of the Facebook comments analyzed in that content analysis mentioned earlier were related to negative shipping experiences had by customers.

It’s not uncommon for flash sale customers to complain of waiting 4-6 weeks to receive merchandise that arrives in several installments.

Fortunately, for merchants who serve New York, San Francisco, and Chicago, Shopify’s UberRUSH integration can help offset these concerns, and the “same-day shipping” option could be showcased right on the product page.

Flash Fail #2: Inventory

Successful flash sales generally result in a large number of orders for relatively few products.

According to an ecommerce fulfillment solutions provider, 45% of flash sale items sell out faster than expected. One way to really disappoint customers is to build excitement, use scarcity to drive them to your flash sale, and then tell them the item they want is out of stock.

Not having enough inventory to satisfy expected demand or not being able to track inventory in real time can negatively impact future sales as well. Likewise, misjudging demand can leave you with a costly excess inventory.

As for the other option, mistakes and poor planning happen. What’s worse than a mistake though, is when companies don’t communicate with their customers about what’s happening.

Some people are always vocal when they don’t receive their products on time, but the majority are content when you keep them in the loop and give them honest information about the status of their order.

More than anything, consumers don’t want to feel like they’re being taken for a ride, and sometimes the best way to handle that is to suck it up and simply say, “I’m sorry.”

Flash Fail #3: Site Crash

If your business model relies on frequent flash sales, load testing your site is a must. The extra server capacity required for successful flash sales is likely cost prohibitive during non-flash sale times. The ability to scale on demand is necessary to prevent crashes.

Not forecasting potential flash sale traffic based on user behavior in response to email marketing, PPC campaigns, and social media traction results in having no visibility into potential peak transaction load.

Of course, the alternative is to switch to Shopify Plus, which has 99.97% uptime, a team of engineers working around the clock to ensure smooth performance, and processed $1.1 million sales per minute at Black Friday, Cyber Monday’s peak.

“Shopify Plus is the only platform we trust to handle the massive spikes in traffic and transactions that come from Good Morning America, The View, and other nationally televised flash sales.”

“With over a thousand successful flash sales we can unequivocally recommend Shopify Plus for all of your high traffic needs.”

Scalability, no matter the season

Experience the speed, security, and support that over 500,000 merchants already trust. Find out what happens when technology gets out of the way so you can focus on your business, instead of worrying about your website.

The Upside of Running Flash Sales

Now that you’re prepared to handle the most common hurdles, let’s define an ultra-specific goal to determine the success of your flash sale.

Only after you narrowly define why you’re holding a flash sale should you begin sorting through the mechanics of the sale itself.

Are you looking to:

Move excess inventory?

Get new customers to sample you?

Retarget people who have visited a specific product page?

With a clear objective in mind early, flash sales can help you grow faster than your peers.

Earlier, we outlined how companies with flash sales as business models have recently fallen on hard financial times. However, in their heydays flash sale-only sites grew at least twice as fast as other ecommerce merchants.

Separately, while the data is several years old, research suggestsflash sale customers return to spend another 385% of the first purchase amount which far outpaces that of ecommerce concerns not running flash sales (94%).

Besides avoiding the flash sale fails outlined earlier, meticulously preparing for your next flash sale is the secret sauce needed to make it a success. Below are the 4 questions you must answer to make your sale a winner for you and your customers.

1. Who Is The Flash Sale For?

Defining your target market hinges on the goal you set for your flash sale.

A huge deal is what flash sale consumers are after so it’s not as important to personalize these communications as you normally would. However, the wider you cast your net the lower the your conversion rate is likely to be, the higher your CPC, and the lower your ROI.

This may also hurt your Quality Score if you’re advertising the sale via AdWords and harm your page rank and ad position which can be extremely detrimental to a sale that may only be lasting for a couple hours.

That’s why mini- flash sales are great ways begin and test.

Mini-flash sales aren’t characterized by extremely small audience sizes. Instead, they simply use a bit of data intended to narrow the net you cast to improve your KPIs. The more you narrow your target, the better shot you have at converting at higher rates and generating higher returns.

If the goal is to target new customers:

Don’t overtly market the flash sale to your existing email list

Identify consumers who have shown interest (on social media) in flash sale product or who follow a competitor with similar product

Poach these consumers by creating a list of their Twitter handles or IDs you can upload and directly target with ads

Run AdWords ads that are triggered by keywords associated with your flash sale item

Ask PPC targets to opt into a separate VIP email list etc. in return for early access or some other benefit to reduce PPC costs and gain repeat access

Be prepared to sell flash sale items to existing customers as you cannot hide the sale and don’t want to create any animosity with customers who may have paid full price

Identify poor or negative product reviews left by customers of your competitors & poach them with an intelligent flash sale ad (We know you had a bad experience with product X- and while we’re not our fault we’d like to make it right. How does 70% off sound? etc)

Consider using keyword spy tools like like SEMRush & SpyFu to identify which items your competitors are focusing on and undercut them by flash selling those items

Consider real time flash sales by connecting your products with trending content (Loving Fifty Shades of Gray? Us too! Tie up your lover with one our neckties- NOW 70% off!)

Flash sell items only to segments that have expressed some interest in them in the past (visited product page, clicked on an ad)

Flash sale abandoned cart items only to those who abandoned them

Hold a “secret” flash sale for new customers, promoted through the confirmation email for that cross-sells related items

3. When & Where Will You Sell It?

Brick and mortar stores have taught us people will forgo sleep, line up before dawn, and behave in ways they otherwise might not for a great deal.

This doesn’t mean we need to “open the doors” to our flash sales at 4 A.M. Nor does it mean we are limited to selling to those who are within the proximity of a physical store. These are obvious points but ones that can be easily overlooked and result in costly marketing and shipping mishaps.

Question: Can you profitably ship flash sale items internationally?

Answer: If not, segment your email list for U.S. consumers only and limit your PPC campaigns by geotargeting ads accordingly.

Question: How long should I run a flash sale?

Answer: Research suggests shorter is often better:

Two hour flash sales result in email open rates 14% higher than the average for the same business

Three hour flash sales have the best transaction to click rates (59% higher)

Question: When should I run my flash sale?

Answer: Look at your analytics and see if any purchasing patterns emerge:

What day(s) of the week do people historically purchase flash items?

What time of day do people historically purchase flash items?

When are your email open rates highest?

If patterns emerge it’ll be obvious when to have your flash sale. If not, research suggests flash sale emails sent after 3 P.M. perform better than mid-day or lunchtime sales:

The idea is to schedule your flash sale when it’s convenient for the customer, unlike this one which is a week long, confuses people in countries not able to take part, appears to feign scarcity, and requires a schedule since sale times change daily:

Complexity is the enemy of a sale that hinges on people making emotional purchasing decisions very quickly. Don’t slow them up or make the purchase inconvenient in the least:

Keep it short to leverage scarcity

Keep it simple so there’s no confusion

Make the value proposition irresistible

4. How Will You Sell It?

Regardless of who you’re targeting, you should be selling a flash sale before the actual sale window.

You’ll go about building anticipation differently based on whether you’re targeting existing or new customers. The tactics that’ll be emphasized or given more weight will be different.

However, no marketing plan — no matter how well crafted — can save a flash sale unless it combines:

Great Merchandise + Deep Discount

It’s really this simple and why scarcity (quantity & sales length) is a foundation on which you’ll build your marketing mix. The key, according to research from Experian, is touching people via email shortly before the sale is to begin.

This isn’t to say PPC ads aren’t important.

However, it seems that PPC might better be used in the days leading up to a flash sale to generate opt-ins that ensure you have direct last minute access to prospects. Granted, the research from Experian is a couple of years old which means it was conducted before the shift to mobile and its dismal average conversion rates became evident. However, it’s clear email, or having a direct line to prospects in the 24-hours leading up to a flash sale, is key in making it a success:

The idea here isn’t to confuse or stay on the fence when it comes to how to market your flash sale. The point is to highlight how multiple strategies can work. The key in determining which channel is likely to produce the best ROI for you is, as usual, hiding in the data:

Where do your prospects & customers spend their time?

What percentage of your marketing mix currently goes to the various channels?

Which of the channels generally results in higher CTRs, conversions, and lower CPMs?

Weight your spend according to where and how you’ve had past success selling the items included in your flash sale. Either way, email will likely be a part of the mix.

Here’s a series of flash sale email templates that may give you some ideas on structuring your drip campaign.

Before you go, here are two twists to consider…

Registration Flash Sale

To better gauge demand for flash sale items and ensure you have the inventory and server capacity to withstand the deluge, consider asking people to register for your flash sale. It’s similar to a traditional auction where you have to provide contact information to receive a bidder’s card.

People who want to reserve the right to purchase during the flash sale must register before the sale. Not only will you get a ballpark idea of what peak load capacity may look like on sale day and how much inventory you may need, but you’ll also position yourself to reduce your PPC spend a bit as you’ll be collecting email addresses for contact purposes as you get closer to the sale.

VIP or Early Bird Flash Sale

This twist achieves many of the same goals registration flash does but adds a bit of mystery to the scarcity inherent in flash sales. Not only does it ask users to register but it creates a bit of intrigue by keeping secret some or all of the items to be included in the flash sale.

Stimulate user imagination by promising a mystery item to be included in the sale just for consumers like them. Or promise a first look or sneak peek at the mystery items shortly before the sale.

Once again, you’ll position yourself to better gauge demand. However, you’ll also create a reason for prospects to visit your site prior to the sale — people who otherwise might not have.

This provides you rich data about which products users show the most interest in and can help you select which items you designate as mystery items. The data also provides you with retargeting opportunities long after the flash sale ends.

Unleash the power and freedom of ecommerce automation

Put your flash sale to-do list on autopilot. To preview Launchpad in action and find out even more about how automation can help you grow bigger, faster …

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About the Author

Nick Winkler is a contributor to the Shopify Plus blog and founder of The Winkler Group, a strategic communications firm that provides content marketing services to the world's best-known brands, businesses, and marketers. Get more from Nick here.